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Ecuador's government has published a tax-reform package that includes a variety of proposals for both local and offshore online gambling operators, as well as Ecuadorian players themselves.
President Guillermo Lasso presented his tax-reform plan to Congress last week, which includes a new tax of 15 percent per month on the income of online betting operators and sports forecasters.
Francisco Briones, the head of Ecuador’s Internal Revenue Service, told VIXIO GamblingCompliance in an interview last week that although brick and mortar gambling was made illegal in the country in 2011, online betting has been able to operate under the guise of sports forecasting, which a state attorney ruled was legal in 2020.
Online operators currently work in Ecuador in an unregulated market but pay value added tax (VAT) through automatic government arrangements with credit card companies.
Lasso's tax bill states that Ecuadorian operators who are resident taxpayers should pay 15 percent tax on their total income minus any prizes paid. But non-resident taxpayers or offshore operators must pay a 15 percent surcharge on every bet placed, as the government cannot enforce a tax on a company abroad after the fact.
In an interview on Monday (May 15), Briones said he hopes that the new tax structure will lend online gambling legitimacy.
“It’s not illegal. One of the benefits of doing this right now is to give them security or labour security by approving this activity in Ecuador. Previously, it has been regarded as a grey area that some people think is legal, and others thought was illegal, but through this tax we are clarifying that, which I think is positive.”
As for land-based casinos, which are currently outlawed in the country, Briones said they are not expected to follow in the footsteps of online operators immediately. “That’s a constitutional problem,” he said.
Elsewhere in the tax reform plan, under a law that addresses the “Strengthening of the Family Economy”, Ecuadorian players must pay 15 percent of their betting winnings in tax, which will be withheld by the platforms.
The 15 percent rate for operators was chosen to be in line with other countries in the region, with Briones citing Peru and Colombia as examples that were studied when considering what tax rate to choose.
Congress will have 30 days to discuss the tax proposal. If passed, it is expected to come into force in 2024.
Briones also said he expects that in the next six months for various ministries to come together to prepare legislation addressing online gambling and “clarify all doubts around the sector”.
